Scudder
Large Company
Growth Fund
Annual Report
July 31, 1999
No-Load Funds
A fund seeking long-term growth of capital through investment primarily in the
equity securities of seasoned, financially strong U.S. growth companies.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder Large Company Growth Fund
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Date of Inception: 5/15/91 Total Net Assets as of Ticker Symbol: SCQGX
7/31/99: $829 million
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o For the twelve-month period ended July 31, 1999, Scudder Large Company Growth
Fund returned 19.24%.
o According to Lipper Analytical Services, the fund's long-term performance has
placed it in the top 33% of domestic equity funds for the three-year period
ended July 31, 1999, and in the top 28% for the five-year period ended on the
same date.^1
o Fund management continues use a bottom-up, research driven approach to invest
in companies with strong earnings growth, capable management teams, and dominant
franchises.
o The fund benefited from its holdings in the media and technology sectors, but
was hurt by the recent weakness in retailers and pharmaceuticals.
Table of Contents
3 Letter from the Fund's President 17 Financial Highlights
4 Performance Update 18 Notes to Financial Statements
5 Portfolio Summary 21 Report of Independent Accountants
6 Portfolio Management Discussion 22 Tax Information
9 Glossary of Investment Terms 25 Officers and Trustees
10 Investment Portfolio 26 Investment Products and Services
14 Financial Statements 27 Scudder Solutions
^1 Lipper Analytical Services, Inc., is an independent analyst of
investment performance. Performance includes reinvestment of dividends
and capital gains. For the period ended July 31, 1999, Scudder Large
Company Growth Fund's Lipper ranking was 462 out of 1067 comparable
funds for the one-year period, 220 out of 666 funds for the three-year
period, and 114 out of 410 for the five-year period.
2 - Scudder Large Company Growth Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Early in 1999, concerns over the direction of the global economy enabled
large company growth stocks to outperform the broader equity market by a wide
margin. In recent months, however, continued economic strength in the U.S. and
signs of a recovery overseas have reduced the sector's relative attractiveness.
While the improving economic backdrop would seem to be good news for large
company growth stocks, many of which are multinational companies whose sales
tend to be boosted by stronger growth, it has in fact put a damper on the
sector's performance.
Even when growth stocks are slumping, however, Scudder Large Company Growth
Fund maintains its focus on investing in the highest quality companies in the
market. Over time, this strategy has enabled the fund to receive an overall
Morningstar Rating(TM) of four stars for its risk-adjusted performance as of
July 31, 1999.^1
Please note that we have changed the fund's fiscal year-end from October 31
to July 31 as part of a larger effort to create efficiencies and reduce the
costs of producing Scudder fund regulatory materials such as fund reports and
prospectuses. Going forward, you will receive regular reports following the
fund's semiannual and annual periods ending in January and July.
Finally, it should be noted that Daniel Pierce retired in June of this year
as President of Scudder Large Company Growth Fund, at which time I assumed that
role and its responsibilities. We are fortunate that Dan's long-standing
affiliation with Scudder is ongoing, and that we will continue to benefit from
his counsel going forward. I am pleased to join the fund's team in this
capacity, and look forward to serving your interests.
Thank you for your continued investment in Scudder Large Company Growth
Fund. If you have any questions about your investment, please call Scudder
Investor Information at 1-800-SCUDDER (1-800-728-3337), or visit our Web site at
www.scudder.com.
Sincerely,
/s/Lynn S. Birdsong
Lynn S. Birdsong
President,
Scudder Large Company Growth Fund
^1 Morningstar proprietary rankings reflect historical risk-adjusted
performance as of July 31, 1999. The ratings are subject to change
every month and are calculated from the funds' 3-, 5-, and 10-year
average annual returns in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day T-bill returns. Past performance is no
guarantee of future results. Scudder Large Company Growth Fund received
4 stars for the 3-, 5-, and 10-year periods ended July 31, 1999. The
top 10% of funds in a broad asset class receive 5 stars, the next 22.5%
receive 4 stars, and the next 35% receive 3 stars. Scudder Large
Company Growth Fund was rated among 3092, 1923, and 746 domestic equity
funds for the 3-, 5-, and 10-year periods, respectively. Ratings are
subject to change. Not all Scudder funds receive 4- and 5-star ratings.
3 - Scudder Large Company Growth Fund
<PAGE>
Performance Update as of July 31, 1999
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Fund Index Comparisons
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Total Return
---------------------------------------------------
Period Ended Growth of Average
7/31/1999 $10,000 Cumulative Annual
---------------------------------------------------
Scudder Large Company Growth Fund
---------------------------------------------------
1 Year $ 11,924 19.24% 19.24%
5 Year $ 29,477 194.77% 24.14%
Life of Fund* $ 39,028 290.28% 18.03%
---------------------------------------------------
Russell 1000 Growth Index
---------------------------------------------------
---------------------------------------------------
1 Year $ 12,405 24.05% 24.05%
5 Year $ 34,291 242.91% 27.93%
Life of Fund* $ 41,743 317.43% 19.11%
---------------------------------------------------
* The Fund commenced operations on May 15, 1991.
Index comparisons begin May 31, 1991.
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Growth of a $10,000 Investment
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THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Russell 1000 Scudder Large
Growh Index Company Growth Fund
----------- -------------------
5/91* 10000 10000
'92 11308 11827
'93 11590 12134
'94 12173 12680
'95 16000 15743
'96 18484 17993
'97 28064 26366
'98 33651 31346
'99 41743 37377
Yearly periods ended July 31
The Russell 1000 Growth Index is an unmanaged capitalization-weighted price
index of the 1000 largest U.S. growth companies traded on the NYSE, AMEX, and
Nasdaq. Index returns assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees or expenses.
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Returns and Per Share Information
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Yearly Periods Ended July 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1991* 1992 1993 1994 1995 1996 1997 1998 1999
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 12.84 $ 14.77 $ 15.13 $ 15.51 $ 17.74 $ 19.49 $ 26.27 $ 29.48 $ 33.36
- --------------------------------------------------------------------------------------------------------------------------
Income Dividends $ -- $ .03 $ .03 $ .08 $ .15 $ .14 $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ -- $ .02 $ -- $ .24 $ 1.09 $ .60 $ 1.77 $ 1.46 $ 1.71
- --------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 7.00 15.42 2.60 4.50 24.15 14.29 46.54 18.89 19.24
- --------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) .37 12.66 2.49 5.03 31.44 15.53 51.83 19.91 24.05
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</TABLE>
On March 1, 1997, the Fund adopted its current name. Prior to that date, the
Fund was known as the Scudder Quality Growth Fund. All performance is
historical, assumes reinvestment of all dividends and capital gains, and is not
indicative of future results. Investment return and principal value will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than when purchased. If the Adviser had not maintained the Fund's expenses, the
total returns for the life of Fund would have been lower.
4 - Scudder Large Company Growth Fund
<PAGE>
Portfolio Summary as of July 31, 1999
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Asset Allocation
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A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Equity Holdings 94%
Cash Equivalents 6%
---------------------------------------------
100%
---------------------------------------------
Management seeks to remain fully invested in equities at all times.
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Sectors
(Excludes 6% Cash Equivalents)
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A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Technology 23%
Health 16%
Consumer Discretionary 14%
Consumer Staples 9%
Manufacturing 9%
Media 8%
Financial 6%
Service Industries 6%
Durables 5%
Communications 3%
Energy 1%
---------------------------------------------
100%
---------------------------------------------
The fund's positions in the media and technology sectors contributed positively
to performance, while health and retail stocks experienced weakness.
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Ten Largest Equity Holdings
(34% of Portfolio)
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1. Microsoft Corp.
Producer of computer operating systems
software
2. Intel Corp.
Producer of semiconductor memory
circuits
3. Cisco Systems, Inc.
Manufacturer of computer network
products
4. General Electric Co.
Producer of electrical equipment
5. Lucent Technologies, Inc.
Designer of public and private
computer networks
6. Pfizer, Inc.
International pharmaceutical company
7. Medtronic Inc.
Manufacturer of cardiac pacemakers
8. Coca-Cola Co.
International soft drink company
9. Merck & Co. Inc.
Drug manufacturer
10. Home Depot, Inc.
Building materials and home
improvement products
Top holdings reflect management's focus on well-managed, large-cap companies
with consistent earnings growth and strong brand franchises.
For more complete details about the Fund's investment portfolio, see page 10.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Large Company Growth Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Valerie F. Malter and George P. Fraise, portfolio
managers of Scudder Large Company Growth Fund, discuss the recent market
environment and the fund's current investment strategy.
Q: After several quarters of outperformance, large company growth stocks have
faltered in recent months. What factors have led to the weaker performance of
this sector?
A: Over the last two years, investors have become accustomed to the tendency of
large-cap growth names to outperform in both up and down markets. This trend was
the result of several important factors. Low interest rates, the strong earnings
growth of many large-caps, and the popularity of indexing and momentum-based
investing all played a part in the sector's dominance. In addition, the fears
that the global economy was going to enter a period of recession and possible
deflation caused investors to pile into the stocks that were believed to have
the most sustainable growth characteristics, and therefore would be able to hold
up in the event of a downturn.
In the past four months, however, there has been a distinct shift in the
investment backdrop. As the U.S. economy has picked up steam, investors have
become less worried about the possibility of a recession. In addition, growing
evidence of a rebound in Asia has alleviated fears that a lack of demand in that
region would act as a drag on the global economy. The improved outlook sparked a
rotation into cyclical stocks and smaller companies, attracting capital away
from large-caps. Higher interest rates also hurt growth stocks by lowering the
present value of their future earnings, thereby reducing the price-to-earnings
multiple that investors are willing to pay for their potential growth.
Q: How have these developments affected fund performance?
A: The fund's total return of 19.24% for the twelve-month period ended July 31,
1999 trailed the 24.05% return of its unmanaged benchmark, the Russell 1000
Growth Index, for the same period. We attribute the fund's underperformance to
factors specific to growth stocks during the final three months of the period.
Profit taking was concentrated in many of the high quality growth companies that
are heavily represented in the portfolio, while many of the out-of-favor growth
stocks with deteriorating fundamentals rebounded spectacularly. It is worth
noting that the same phenomenon occurred in the first quarter of 1998, only to
reverse in the second quarter. We do not believe that the underperformance of
higher quality companies with stronger fundamentals will prove sustainable,
despite their spotty performance in the last four months.
Q: What stocks have performed well for the fund in recent months?
A: Our holdings in the media sector continue to be strong performers. This is an
area where we have had significant exposure for several years now, and it
continues to contribute positively to returns. Outdoor Systems, which gained 31%
over the full twelve months, recently agreed to be acquired by Infinity
Broadcasting, another fund holding that itself rose 20% since its initial public
offering. Clear Channel Communications (24%) and Omnicom (36%) also were strong
performers.
6 - Scudder Large Company Growth Fund
<PAGE>
Our holdings in the technology sector have also done very well. Among the most
noteworthy have been Linear Technology (106%), Cisco Systems (95%), and Applied
Materials (115%). America Online and EMC also performed well until spring, but
have since fallen off significantly amid the broader slump in growth stocks. On
the other hand, our positions in makers of durable technology products --
namely, Nokia and Lucent Technologies -- have been strong performers, as have
QUALCOMM and Motorola, two recent additions to the portfolio.
Q: What holdings have detracted from performance?
A: Disappointing sectors included retail and health care, particularly the
pharmaceutical names that came under pressure as a result of product
disappointments, renewed fears of regulatory changes aimed at curbing drug
costs, and lofty valuations. Drug stocks performed better in June when these
regulatory changes did not come to pass, but were unable to hold on to their
gains in July. In the first six months of the year, Pfizer fell 12%, Eli Lilly
dropped 19%, SmithKline Beecham declined 4%, and Merck was flat. On the retail
side, we benefited from the strong returns of companies such as Wal-Mart,
Costco, and Dayton Hudson through April, but the prospect of higher interest
rates raised fears that consumers would cut back on their spending. As a result,
many of our holdings in this sector declined over the final three months of the
period, putting a dent in the fund's performance.
Q: Please provide some examples of fund holdings that best illustrate your
investment strategy.
A: In past reports, we have stated that we are looking for companies that
possess a strong brand franchise, growing sales volume, rising market share,
outstanding management, and consistent earnings growth. We believe that Intel
serves as a classic example of this type of company. Intel's technologies, which
have defined the hardware for personal computer architecture, actually help
drive demand in the PC market. Earnings should continue to be driven by strong
top-line growth, gross margin improvement, and a shift in the product mix to
higher-end microprocessors. We feel that Intel will benefit from outstanding
opportunities over the next eighteen months, and that the company will continue
to take market share from its primary rival, Advanced Micro Devices. Intel is
clearly the premiere company within its sector, and we are convinced that it
will maintain this position going forward.
QUALCOMM is another holding that demonstrates our focus on high quality names.
The company is the leading supplier of wireless CDMA technology, which will be
dominant in the next generation of cellular phones. The CDMA market is large and
has been the fastest growing wireless technology over the last two years, and
every indication is that it will continue to expand rapidly in the years ahead.
QUALCOMM owns a huge patent portfolio on CDMA technology -- 532 issued and 199
pending -- that allows it to collect royalties as its technology is deployed. As
the leading company in its industry, QUALCOMM stands to benefit from substantial
earnings growth
7 - Scudder Large Company Growth Fund
<PAGE>
in the years ahead, a fact that makes us willing to pay a substantial multiple
for its stock.
Q: What is your outlook on large company growth stocks from here?
A: As long as fears of higher interest rates are permeating the financial
markets, it will be difficult for the sector to mount a sustained rally. Even
when large-caps underperform, however, the core of our investment process will
continue to focus on finding the highest quality companies that we believe will
offer consistent and sustainable earnings growth. We are fully cognizant of the
fact that the tremendous divergence in performance between large-cap and
small-cap growth stocks that we witnessed over the last couple of years is
unsustainable. Consequently, we will be vigilant for opportunities in companies
with market capitalizations of between $5 billion and $20 billion, below the
fund's current range. Finally, as always, we will remain relatively sector
neutral, focusing instead on individual stock selection.
We continue to believe that the companies in the portfolio should do well in an
environment where inflation is low and monetary policy is not restrictive. While
we are conscious of the lofty valuations of a number of the fund's holdings, we
believe that those companies that exhibit the strongest fundamentals in their
respective industries will outperform over time. We also feel that the practice
of selling winners on the basis of valuation alone will often lead to
underperformance. Looking ahead, we intend to adhere to the processes and
disciplines that we have abided by for years, regardless of changes in the
external market environment.
Scudder Large Company
Growth Fund: A Team Approach to Investing
Scudder Large Company Growth Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the fund's management process. Team members work together to develop
investment strategies and select securities for the fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits fund investors
by bringing together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Valerie F. Malter joined the Adviser in 1995 and is
responsible for the fund's investment strategy and daily operation. Valerie has
over 16 years of investment experience with 8 years of experience as an analyst
covering a wide range of industries, and 8 years of portfolio management
experience focusing on the stocks of companies with medium- to large-sized
market capitalizations. George Fraise, Portfolio Manager, joined the fund and
the Adviser in 1997 and has 12 years of experience in the financial industry.
8 - Scudder Large Company Growth Fund
<PAGE>
Glossary of Investment Trust
BOTTOM-UP INVESTING An investment style that focuses on the use of
STYLE research to assess the performance of individual
companies before considering the impact of economic
trends. This approach, which is the opposite of
"top-down" investing, assumes that the most
significant determinant of performance is individual
stock selection, rather than industry or country
allocation.
BUSINESS CYCLE The recurrence of periods of expansion (recovery) and
contraction (recession) in economic activity with
effects on growth, inflation, and employment.
CYCLICAL STOCKS Companies whose earnings are closely tied to the
business cycle. Cyclical industries include steel,
cement, paper, machinery, and autos.
DEFLATION A decline in the prices of goods and services. The
opposite of inflation, deflation usually has a
negative effect on output and employment.
GROWTH STOCK Stock of a company that has displayed above average
earnings growth and is expected to continue to
increase profits faster than the overall market.
Stocks of such companies usually trade at higher
valuations and experience more price volatility than
the market as a whole. Distinct from value stock.
PRICE/EARNINGS RATIO (P/E) A widely used gauge of a stock's valuation that
(also "earnings multiple") indicates what investors are paying for a company's
earning power at the current stock price. A P/E ratio
may be based on a company's projected earnings for
the coming 12 months. A higher "earnings multiple"
indicates higher expected earnings growth, along with
greater risk of earnings disappointment.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
9 - Scudder Large Company Growth Fund
<PAGE>
Investment Portfolio as of July 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 5.9%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Repurchase Agreement with State Street Bank and Trust Company dated 7/30/1999, 5.04%, to be
repurchased at $49,409,743 on 8/2/1999, collateralized by a $45,645,000 U.S. Treasury Bond,
7.25%, 5/15/2016 (Cost $49,389,000) .............................................................. 49,389,000 49,389,000
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 94.1%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 13.6%
Department & Chain Stores 9.0%
Consolidated Stores Corp.* ......................................................................... 447,000 6,984,375
Costco Companies, Inc.* ............................................................................ 152,300 11,384,425
Dayton Hudson Corp. ................................................................................ 167,000 10,802,813
Gap, Inc. .......................................................................................... 195,250 9,127,938
Home Depot, Inc. ................................................................................... 307,900 19,647,869
Wal-Mart Stores, Inc. .............................................................................. 408,900 17,276,025
------------
75,223,445
------------
Recreational Products 2.3%
Electronic Arts Inc.* .............................................................................. 170,500 9,707,844
Hasbro, Inc. ....................................................................................... 250,100 6,502,600
Premier Parks, Inc. * .............................................................................. 67,100 2,595,931
------------
18,806,375
------------
Restaurants 1.4%
McDonald's Corp. ................................................................................... 281,200 11,722,525
------------
Specialty Retail 0.9%
Circuit City Stores Inc. ........................................................................... 159,600 7,541,100
------------
Consumer Staples 8.0%
Food & Beverage 3.5%
Coca-Cola Co. ...................................................................................... 330,300 19,921,219
PepsiCo Inc. ....................................................................................... 233,190 9,123,559
------------
29,044,778
------------
Package Goods/Cosmetics 4.5%
Colgate-Palmolive Co. .............................................................................. 298,800 14,753,250
Estee Lauder Companies, Inc. "A" ................................................................... 163,500 7,776,469
Procter & Gamble Co. ............................................................................... 170,200 15,403,100
------------
37,932,819
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Large Company Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health 15.1%
Health Industry Services 0.7%
IMS Health Inc. ............................................................................... 213,900 5,962,463
------------
Medical Supply & Specialty 2.4%
Medtronic Inc. ................................................................................ 280,644 20,223,908
------------
Pharmaceuticals 12.0%
Bristol-Myers Squibb Co. ...................................................................... 146,900 9,768,850
Eli Lilly & Co. ............................................................................... 175,998 11,549,869
Johnson & Johnson ............................................................................. 104,000 9,581,000
Merck & Co., Inc. ............................................................................. 291,700 19,744,444
Pfizer, Inc. .................................................................................. 754,200 25,595,663
Schering-Plough Corp. ......................................................................... 229,300 11,235,700
Warner-Lambert Co. ............................................................................ 190,600 12,579,600
------------
100,055,126
------------
Communications 3.2%
Telephone/Communications
Frontier Corp. ................................................................................ 161,100 8,930,981
JDS Uniphase Corp.* ........................................................................... 39,900 3,605,963
MCI WorldCom, Inc.* ........................................................................... 167,000 13,777,500
------------
26,314,444
------------
Financial 5.4%
Insurance 2.1%
American International Group, Inc. ............................................................ 153,287 17,800,453
------------
Other Financial Companies 3.3%
Federal Home Loan Mortgage Corp. .............................................................. 137,800 7,906,275
Federal National Mortgage Association ......................................................... 166,900 11,516,100
Morgan Stanley, Dean Witter & Co. ............................................................. 87,200 7,858,900
------------
27,281,275
------------
Media 7.2%
Advertising 1.9%
Omnicom Group, Inc. ........................................................................... 160,000 11,340,000
Outdoor Systems, Inc. * ....................................................................... 128,387 4,292,940
------------
15,632,940
------------
Broadcasting & Entertainment 4.3%
Clear Channel Communications, Inc.* ........................................................... 265,900 18,496,669
Infinity Broadcasting Corp. "A'"* ............................................................. 278,200 7,667,888
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Large Company Growth Fund
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Univision Communication Inc.* ........ 142,300 9,854,275
-----------
36,018,832
-----------
Cable Television 1.0%
AT&T Corp-- Liberty Media Group "A"* . 234,200 8,665,400
-----------
Service Industries 6.0%
EDP Services 4.1%
America Online Inc.* ................. 190,500 18,121,313
Electronic Data Systems Corp. ........ 132,300 7,979,344
PSINet, Inc. * ....................... 162,000 8,378,438
-----------
34,479,095
-----------
Investment 1.0%
Charles Schwab Corp. ................. 185,000 8,151,563
-----------
Miscellaneous Commercial Services 0.9%
Galileo International, Inc. .......... 131,700 6,741,394
-----------
Durables 4.4%
Telecommunications Equipment
Lucent Technologies Inc. ............. 446,300 29,037,394
Nokia Oyj (ADR) ...................... 95,100 8,089,444
-----------
37,126,838
-----------
Manufacturing 8.4%
Diversified Manufacturing 7.3%
General Electric Co. ................. 304,800 33,223,200
Textron, Inc. ........................ 148,200 12,189,450
Tyco International Ltd. (New) ........ 160,800 15,708,150
-----------
61,120,800
-----------
Industrial Specialty 1.1%
QUALCOMM Inc. * ...................... 59,400 9,266,400
-----------
Technology 21.8%
Computer Software 5.2%
Microsoft Corp.* ..................... 506,300 43,446,860
-----------
Diverse Electronic Products 2.2%
Applied Materials, Inc.* ............. 143,000 10,287,063
Motorola Inc. ........................ 87,200 7,957,000
-----------
18,244,063
-----------
EDP Peripherals 1.6%
EMC Corp.* ........................... 217,900 13,196,569
-----------
The accompanying notes are an integral part of the financial statements.
12 - Scudder Large Company Growth Fund
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Electronic Components/Distributors 4.2%
Cisco Systems, Inc.* .................. 569,550 35,383,294
-----------
Electronic Data Processing 3.4%
International Business Machines Corp. . 94,400 11,864,900
Sun Microsystems, Inc.* ............... 246,300 16,717,613
-----------
28,582,513
-----------
Semiconductors 5.2%
Intel Corp. ........................... 522,200 36,031,800
Linear Technology Corp. ............... 124,500 7,641,188
-----------
43,672,988
-----------
Energy 1.0%
Oilfield Services/Equipment
Schlumberger Ltd. ..................... 131,600 7,970,025
Total Common Stocks (Cost $546,689,067) 785,608,285
- --------------------------------------------------------------------------------
Total Investment Portfolio--100.0%
(Cost $596,078,067) (a) 834,997,285
* Non-income producing security.
(a) The cost for federal income tax purposes was $598,618,735. At July 31,
1999, net unrealized appreciation for all securities based on tax cost
was $236,378,550. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $248,232,318 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax
cost over market value of $11,853,768.
The accompanying notes are an integral part of the financial statements.
13 - Scudder Large Company Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of July 31, 1999
<TABLE>
<CAPTION>
Assets
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market (identified cost $596,078,067) ........... $834,997,285
Cash ............................................................ 634
Receivable for investments sold ................................. 7,247,069
Receivable for Fund shares sold ................................. 781,130
Dividends and interest receivable ............................... 205,784
Other assets .................................................... 2,758
------------
Total assets .................................................... 843,234,660
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased ............................... 12,313,826
Payable for Fund shares redeemed ................................ 463,206
Accrued management fee .......................................... 488,848
Other payables and accrued expenses ............................. 654,333
------------
Total liabilities ............................................... 13,920,213
Net assets, at market value $829,314,447
Net Assets
- ---------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments ........... 238,919,218
Accumulated net realized gain (loss) ............................ 13,071,880
Paid-in capital ................................................. 577,323,349
Net assets, at market value $829,314,447
Net Asset Value
- ---------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($829,314,447 / 24,863,681 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) .................................................. $ 33.35
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Large Company Growth Fund
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
July 31, 1999 October 31,
Investment Income (Loss) (Note E) 1998
- -----------------------------------------------------------------------------------------------------------------------------
Income:
<S> <C> <C> <C> <C>
Dividends (net of foreign taxes withheld of $9,333 and $10,896,
respectively)..................................................... $ 3,105,828 $ 3,138,823
Interest ........................................................... 1,154,622 847,982
------------- -------------
4,260,450 3,986,805
Expenses:
Management fee ..................................................... 3,855,969 2,478,112
Services to shareholders ........................................... 2,470,251 1,378,899
Custodian and accounting fees ...................................... 84,067 92,194
Trustees' fees and expenses ........................................ 26,851 46,890
Reports to shareholders ............................................ 118,051 79,000
Auditing ........................................................... 34,337 35,733
Legal .............................................................. 15,352 13,284
Registration fees and other expenses ............................... 168,959 75,714
------------- -------------
6,773,837 4,199,826
Net investment income (loss) (2,513,387) (213,021)
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments .......................... 16,822,623 31,321,568
Net unrealized appreciation (depreciation) on investments during the
period............................................................ 116,057,567 35,342,915
Net gain (loss) on investment transactions ......................... 132,880,190 66,664,483
Net increase (decrease) in net assets resulting from operations $ 130,366,803 $ 66,451,462
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Large Company Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Nine Months
Ended Years Ended October 31,
July 31, 1999
Increase (Decrease) in Net Assets (Note E) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) ............. $ (2,513,387) $ (213,021) $ (125,567)
Net realized gain (loss) on investments .. 16,822,623 31,321,568 19,434,917
Net unrealized appreciation (depreciation)
on investments during the period ....... 116,057,567 35,342,915 42,639,713
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations................. 130,366,803 66,451,462 61,949,063
------------- ------------- -------------
Distributions to shareholders from:
Net realized gains from investment
transactions............................ (32,234,768) (16,858,738) (17,790,946)
------------- ------------- -------------
Fund share transactions:
Proceeds from shares sold ................ 476,042,466 297,954,229 131,500,078
Net asset value of shares issued to
shareholders in reinvestment
of distributions........................ 31,494,884 16,409,785 17,272,174
Cost of shares redeemed .................. (278,510,744) (149,865,907) (126,119,027)
------------- ------------- -------------
Net increase (decrease) in net assets from
Fund share transaction.................. 229,026,606 164,498,107 22,653,225
------------- ------------- -------------
Increase (decrease) in net assets ........ 327,158,641 214,090,831 66,811,342
Net assets at beginning of period ........ 502,155,806 288,064,975 221,253,633
Net assets at end of period .............. $ 829,314,447 $ 502,155,806 $ 288,064,975
Other Information
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period 17,828,773 11,477,024 10,441,357
------------- ------------- -------------
Shares sold .............................. 14,423,168 11,101,198 5,688,934
Shares issued to shareholders in
reinvestment of distributions........... 989,473 667,879 850,846
Shares redeemed .......................... (8,377,733) (5,417,328) (5,504,113)
------------- ------------- -------------
Net increase (decrease) in Fund shares ... 7,034,908 6,351,749 1,035,667
Shares outstanding at end of period ...... 24,863,681 17,828,773 11,477,024
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Large Company Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Nine Months
Ended July 31,
1999 (a) Years Ended October 31,
(Note E) 1998(a) 1997(a) 1996(a) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $28.17 $ 25.10 $ 21.19 $ 18.44 $ 16.17 $ 16.42
Income from investment operations:
Net investment income (loss) ............. (.11) (.02) (.01) .08 .11 .16
Net realized and unrealized gain (loss)
on investments ......................... 7.00 4.55 5.69 3.41 3.40 (.09)
Total from investment operations ......... 6.89 4.53 5.68 3.49 3.51 .07
Less distributions from:
Net investment income .................... -- -- -- (.14) (.15) (.08)
Net realized gains on investment ......... (1.71) (1.46) (1.77) (.60) (1.09) (.24)
transactions
Total distributions ...................... (1.71) (1.46) (1.77) (.74) (1.24) (.32)
Net asset value, end of period ........... $33.35 $ 28.17 $ 25.10 $ 21.19 $ 18.44 $ 16.17
- ---------------------------------------------------------------------------------------------------------------------
Total Return (%) ......................... 24.83** 18.86 28.84 19.49 23.78 .39
Ratios and Supplemental Data
Net assets, end of period ($ millions) ... 829 502 288 221 173 113
Ratio of operating expenses to average
daily net assets (%) ................... 1.23* 1.19 1.21 1.07 1.17 1.25
Ratio of net investment income (loss)
to average daily net assets (%) ........ (.46)* (.06) (.05) .41 .71 .96
Portfolio turnover rate (%) .............. 62.6* 54.1 67.9 68.8 91.6 119.7
</TABLE>
(a) Based on monthly average shares outstanding during the period.
* Annualized
** Not annualized
17 - Scudder Large Company Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Large Company Growth Fund (the "Fund") is a diversified series of the
Investment Trust (the "Trust") which is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company organized as a Massachusetts business trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles, which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. Securities, which are traded
on U.S. or foreign stock exchanges, are valued at the most recent sale price
reported on the exchange on which the security is traded most extensively. If no
sale occurred, the security is then valued at the calculated mean between the
most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation is used. Securities quoted on the
Nasdaq Stock Market ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities, which are not quoted on Nasdaq but
are traded in another over-the-counter market are valued at the most recent sale
price, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities purchased with an original maturity greater than sixty
days are valued by pricing agents approved by the officers of the Trust, whose
quotations reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. Money market instruments purchased with an original maturity of
sixty days or less are valued at amortized cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
18 - Scudder Large Company Growth Fund
<PAGE>
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
Expenses. Expenses arising in connection with a specific Fund are allocated to
that Fund. Other Trust expenses are allocated between the Funds in proportion to
their relative net assets.
B. Purchases and Sales of Securities
For the nine months ended July 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $496,802,392 and
$327,330,608, respectively. For the year ended October 31, 1998, purchases and
sales of investment securities (excluding short-term investments) aggregated
$322,531,099 and $183,782,084, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser") the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 0.70% of the Fund's
average daily net assets computed and accrued daily and payable monthly. For the
nine months ended July 31, 1999, the fee pursuant to the Agreement amounted to
$3,855,969, of which $488,848 was unpaid at July 31, 1999. For the year ended
October 31, 1998, the fee pursuant to the Agreement amounted to $2,478,112.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
nine months ended July 31, 1999, the amount charged to the Fund by SSC
aggregated $830,924, of which $93,939 was unpaid at July 31, 1999. For the year
ended October 31, 1998, the amount charged to the Fund by SSC aggregated
$626,382.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the nine months ended July 31,
1999, the amount charged to the Fund by STC aggregated $777,528, of which
$256,667 was unpaid at July 31, 1999. For the year ended October 31, 1998, the
amount charged to the Fund by STC aggregated $411,592.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the nine months
ended July 31, 1999, the amount charged to the Fund by SFAC aggregated $76,061,
of which $18,026 was unpaid at July 31, 1999. For the year ended October 31,
1998, the amount charged to the Fund by SFAC aggregated $62,799.
19 - Scudder Large Company Growth Fund
<PAGE>
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. At July 31, 1999, the Special
Servicing Agreement expense charged to the Fund amounted to $364,026. For the
year ended October 31, 1998, the Special Servicing Agreement expense charged to
the Fund amounted to $253,762.
The Trust pays each of its Trustees not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings. For
the nine months ended July 31, 1999, Trustees fees and expenses aggregated
$26,851. For the year ended October 31, 1998, Trustees fees and expenses
aggregated $46,890.
D. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
E. Year End Change
On August 10, 1998, the Fund changed its fiscal year end for financial reporting
and federal income tax purposes to July 31 from October 31.
20 - Scudder Large Company Growth Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Investment Trust and the Shareholders of Scudder Large
Company Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Large Company Growth Fund
(the "Fund") at July 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
September 17, 1999
21 - Scudder Large Company Growth Fund
<PAGE>
Tax Information
The Fund paid distributions of $1.71 per share from net long-term capital gains
during its nine months endedJuly 31, 1999, of which 100% represented 20% rate
gains. Pursuant to section 852 of the Internal Revenue Code, the Fund designates
$12,500,000 as capital gain dividends for the nine months ended July 31, 1999,
of which 100% represented 20% rate gains.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
22 - Scudder Large Company Growth Fund
<PAGE>
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intentionally
left blank.
23 - Scudder Large Company Growth Fund
<PAGE>
This Page
intentionally
left blank.
24 - Scudder Large Company Growth Fund
<PAGE>
Officers and Trustees
Lynn S. Birdsong*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and
General Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center
for Business Ethics, Bentley
College; President, Driscoll
Associates
Peter B. Freeman
Trustee; Corporate Director and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Venture Partner,
Venture Capital Group
Bruce F. Beaty*
Vice President
Jennifer P. Carter*
Vice President
Philip S. Fortuna*
Vice President
William F. Gadsden*
Vice President
Robert T. Hoffman*
Vice President
Valerie F. Malter*
Vice President
Ann M. McCreary*
Vice President
John Millette*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
25 - Scudder Large Company Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market^+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series --
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free^+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder Kemper
Investments, Inc., are traded on the New York Stock Exchange and, in some cases,
on various other stock exchanges.
26 - Scudder Large Company Growth Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-SCUDDER
Please address all written correspondence to: The Scudder Funds, P.O. Box 2291, Boston, Massachusetts 02107-2291
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27 - Scudder Large Company Growth Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $280 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
